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Economic Growth in the Digital Era: Limits and Benefits of Globalization and Digital Transformation in KSA

Author

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  • Mohamed Neffati

    (Economic Department, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 11564, Saudi Arabia)

Abstract

Within the modern perspective of globalization, digitalization may be perceived as a key driver of technological development, a factor strongly affecting economic efficiency and the growth of Gross Domestic Product (GDP). However, this assumption still requires deeper empirical confirmation in developing nations whose economies depend on oil revenues. This paper investigates the causal and cointegration relationship between socioeconomic globalization, digitalization, and its impact on economic growth, using the kingdom of Saudi Arabia (KSA) as a specific case of global economic transformation between 1990 and 2022. Using the Autoregressive Distributed Lag (ARDL) model with various estimation methods, including Ordinary Least Squares (OLS), Fully Modified Ordinary Least Squares (FMOLS), Dynamic Ordinary Least Squares (DOLS), and Canonical Cointegration Regression (CCR), we identified the most statistically significant factors contributing to economic growth. Our findings indicate that globalization has a negative and significant effect on GDP per capita at the 1 percent significance level. On the other hand, the results suggest that digitalization significantly contributes to economic growth in the short and long run. From these findings, this paper provides some key policy recommendations for improving the economic outlook of Saudi Arabia and other developing countries.

Suggested Citation

  • Mohamed Neffati, 2025. "Economic Growth in the Digital Era: Limits and Benefits of Globalization and Digital Transformation in KSA," Sustainability, MDPI, vol. 17(9), pages 1-22, April.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:9:p:3893-:d:1642714
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